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Last Updated: Saturday, 19 March, 2005, 00:47 GMT
Universities vie to attract students
By Mike Baker
BBC News education correspondent

Mike Baker graphic

Laptops, travel passes and vouchers for new bicycles - all are on offer to new university students in 2006.

"What's new about that?" you might ask. After all, the banks have been offering incentives for years to win student accounts.

Well, now it is universities themselves which are offering incentive deals and promotional packages.

This week the university admissions watchdog, the Office for Fair Access (Offa), announced approval of the so-called "access agreements" for universities and colleges.


These agreements set out what universities must do to help students from poorer backgrounds in return for being allowed to raise their tuition fees above the current maximum of just over 1,000.

Now, if you recall, when the government introduced the idea of "top-up fees" (perhaps the biggest misnomer in education - and I'll come back to that later), the idea was, in part, to create a market in higher education.

It was envisaged there would be some universities charging the maximum of 3,000 and some which might even go below the standard fee of 1,000 or so.

But it soon became clear that the great majority of universities feared that charging anything less than the maximum would suggest they were at the cheaper end of the market. No-one wanted to be Woolworth; they all wanted to be Harrods.

And so it has turned out. All but eight bold (or will it prove to be "reckless"?) universities will charge the maximum fee from September 2006.

The factor which will differentiate universities, then, will not be fees but rather the level of bursaries and scholarships, in cash or in kind, they offer.

Offa says that by 2009, some 300m a year will be paid in bursaries for low income students. About half of all students will get some sort of payment in cash or kind.


The English university system (and perhaps in Wales and Northern Ireland too, depending on forthcoming decisions) will have taken a big step towards becoming a market.

A year ago, in a speech in London, the former Labour Secretary to President Clinton, Robert Reich, warned that universities in the USA were "coming to resemble any other kind of personal service industry" selling "higher education products ... on the market".

Well now it seems we can say the same of our system.

This means that the already difficult task of choosing a university is about to become even more demanding.

Now on top of assessing a university's reputation, courses, location and facilities, would-be students will also have to compare fees and bursaries.

On fees alone, the decision will usually be straightforward. In 92% of universities it will be 3,000 a year.

There could, of course, be a rush to the likes of Leeds Metropolitan or Thames Valley which are bucking the trend and charging less than that.

But in general, students will have to do some careful sums to decide which bursary package is best for them and, in some cases, whether lower fees at one institution will be cancelled out by higher bursaries at another.

Winners and losers

The range of means-tested bursary levels is wide enough, from 300 to 3,000 a year. Add in bursaries awarded for academic merit and the range extends up to 5,000 a year.

For those students eligible for the full new government grant of 2,700 that could - in a few cases - mean an annual income of 7,700.

Indeed, for all the fears about "top-up fees", the truth is that while some will be worse off, others will be much better off than now.

This is all the more so when you remember (and this is where the misnomer comes in) that no student or parent has to pay any "top-up fees" at all.

The only people who will have to pay are graduates.

For in truth, the "top-up fees" scheme is really a graduate tax. The government could have called it that but of course politicians do not like to admit they are introducing new taxes.

Yet the irony is that the government has lost some of the credit it might have won from certain areas by the obfuscation of the name "top-up fees".

For it has meant that many people mistakenly believe that when they start university in 2006 they will have to pay a fee.

The reality is that they do not unless they want to - they are signing a contract to pay in the future and then only after they have started to earn.


In the meantime, many students will see the restoration of the grant - not a loan, but a non-repayable cash gift.

So a student on the full maintenance grant of 2,700 plus a "typical" bursary of 1,000 a year will, over three years, get 11,100.

This is more than their future commitment to repay fees of 9,000, in regular payments, at a nil real terms rate of interest, once they have started paid work.

Of course not everyone will be in this position. Those from better-off homes will get neither grant nor means-tested bursaries.

As they will eventually be paying "fees" they will be 6,000 worse off (on the basis of 3,000 a year over three years instead of around 1,000 a year now).

Where is their money going? Well, about two-thirds of it will go towards improving university finances and, hopefully, facilities for students.

The other third will fund the bursaries for less well-off students.

In short, this is a redistributive scheme. It is a graduate tax which charges the better-off more in order to give to the less well-off.

While genuine arguments can be had about the fairness of this, it is odd that the "top-up fees" scheme has been so strongly criticised by those who, in other spheres, might welcome a "take from the rich and give to the poor" approach.

If fees become a major election issue (and there is clear blue water between the parties on this), I wonder if the government will regret having allowed their scheme to be labelled "top-up fees" rather than "graduate tax".

We welcome your comments. A selection will be published later in the week.

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Universities to charge top fees
17 Mar 05 |  Education
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11 Mar 05 |  Education

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